Will the Fed's New Regulations Prevent Recovery?

On Friday, the Federal Reserve announced a plan to expand its supervision of U.S. banks, according to the

. The Fed will now annually review the capital of all banks with over $50 billion in assets. If the Fed believes that a bank is not adequately capitalized to handle a downturn in the U.S. economy, the Fed can require that the bank raise capital. This regulation may be used in the future to prevent banks from using their capital to pay dividends or buy back stock. This comes just days after an

between the Chairman of the Federal Reserve—Ben Bernanke—and the CEO of JP Morgan Chase

—Jamie Dimon. On Tuesday, Bernanke gave a speech to a group of bankers, including Dimon. In the following question and answer session, Dimon asked Bernanke if he believed that new banking regulations would stifle economic recovery. Bernanke, citing foreign banks, did not believe that the U.S. was in danger of over-regulation.

Traders who believe that the Fed's new regulation will be bullish for the U.S. economy might want to consider the following trades:

Traders who believe that Dimon's point was valid and that the U.S. risks stifling economic growth with burdensome regulations may consider taking positions in the following: